US Dollar/Brazilian Real FX Spot Rate

With the first round of Brazil's presidential election taking place Sunday, Wall Street is gearing up with starkly different market predictions depending on the outcome of the neck-and-neck race between 80-year-old leftist Luiz Inacio Lula da Silva and 45-year-old right-winger Flavio Bolsonaro. In short, if Bolsonaro wins, Wall Street expects a rally in the country's bonds, currency and stocks. Kalshi markets now show Bolsonaro favored to win 60% to Lula's 39%, though prediction markets are prohibited in Brazil and may not reflect local sentiment. JPMorgan analysts say that if Brazil enters another period of reform, interest rates could decline to their neutral level, 6% in real terms and 10% in nominal terms, and they would be thinking about MSCI Brazil upside potential between 21% and 41%, with the forward P/E moving from a current 8.6 to as high as 13.3. JPMorgan also calls the currency outcome bimodal, with USD/BRL moving to 5.50 if Lula wins and 4.90 if Bolsonaro wins.

In the Focus Bulletin economic weekly survey released by Brazil's central bank on the 28th, private analysts' forecast for 2026 inflation based on the IPCA expanded consumer price index was raised to a 4.99% rise from the previous week's forecast of a 4.92% rise. It was the second consecutive weekly increase, and a month earlier the forecast was a 5.01% rise. The backdrop is the persistence of inflation risks stemming from the war in Iran. The 2027 forecast was also raised to a 4.31% rise from a 4.30% rise, and a month earlier it stood at a 4.28% rise. Meanwhile, the forecast for 2026 real GDP growth was cut to 1.86% from the previous week's 1.88%, the third consecutive weekly downgrade, and a month earlier it was 1.92%. The 2027 forecast was also cut to 1.41% from 1.43%, and a month earlier it was 1.50%. The policy interest rate forecast for the end of 2026 was left unchanged at the previous week's 13.50%, and a month earlier it was 13.75%. The forecast for the end of 2027 was also left unchanged at 12.00%, marking the fifteenth consecutive week without a change. The forecast for the next meeting on November 4 was cut to 13.50% from 13.63%, the second consecutive weekly downgrade, and a month earlier it was 13.75%. Since the current rate is 13.75%, this implies a 0.25 percentage point cut. The exchange rate forecast against the dollar for the end of 2026 was left unchanged at the previous week's 5.20 reais, unchanged for the fifteenth consecutive week, while the end-2027 forecast was also left unchanged at 5.28 reais, unchanged for the second consecutive week, and a month earlier it was 5.30 reais.

The Brazilian Real is strengthening against the US Dollar as election polls show challenger Flavio Bolsonaro overtaking President Lula in a run-off, according to ING's Chris Turner. USD/BRL is drifting towards 5.05/5.07, with prediction markets still favoring Lula but by a shrinking margin.

Societe Generale strategists observe that the Brazilian Real largely ignored softer inflation data, which still supports a Banco Central do Brasil rate cut in September followed by a pause into elections.

Commerzbank FX analysts Norman Liebke and Michael Pfister see the Brazilian Real supported by the Brazilian Central Bank’s hawkish stance and still-elevated real interest rates. The analysts note that election risks could weigh on the currency in the near term, but they expect renewed gains afterward. They highlight that the central bank’s commitment to fighting inflation and the high level of real rates provide a supportive backdrop for the Real. The view comes as markets assess the outlook for Brazilian monetary policy and political developments.

The global economic calendar for the week of July 31 to August 6, 2026, features several key highlights. On Friday, July 31, the Bank of Japan will hold its monetary policy meeting and announce its interest rate decision, while China will release the July manufacturing and services PMI from the National Bureau of Statistics, and the US will report the final University of Michigan consumer sentiment index. Then on Monday, August 3, several countries will announce final manufacturing PMI figures from S&P Global, including the US which will also report the ISM manufacturing index. On Tuesday, August 4, the US will release the June Job Openings and Labor Turnover Survey, or JOLTS, and factory orders. On Wednesday, August 5, Indonesia will report second-quarter GDP, the Reserve Bank of India will announce its policy rate, and the US will have the ADP private employment report, as well as the final services PMI and the ISM services index. The week wraps up on Thursday, August 6, with the Central Bank of Brazil announcing its interest rate, and the US reporting weekly jobless claims.

Societe Generale highlights that USD/BRL has retreated to 5.07 after threatening 5.20 earlier in July, with the Brazilian Real retaining a firm tone following soft US Producer Price Index data and lower Treasury yields. The bank notes that the pair has moved below its 50-day moving average, which opens a potential move toward the 5.00 level.

Coffee prices surged today, with September arabica coffee up 11.00 cents to a 3.33% gain and September ICE robusta coffee up $116 to a 3.03% gain. The rally was fueled by a strengthening Brazilian real, which hit a 3.5-week high against the dollar, discouraging export sales from Brazil's coffee producers. Illiquid trading conditions, exacerbated by ICE raising margin requirements twice last week, have amplified price volatility as many commodity funds closed positions. Additionally, a delayed Brazilian coffee harvest—52% complete as of July 1 versus the five-year average of 55%—and concerns that an emerging El Niño pattern could damage next year's crop provided further support.

UiPath appears to be a buy right now, while Nu Holdings faces near-term uncertainty from Brazil's high interest rates. UiPath is evolving into an enterprise AI orchestration platform, with AI product adoption driving higher customer spending and deeper enterprise relationships. The Zacks Consensus Estimate for UiPath's second-quarter fiscal 2027 earnings is 15 cents per share, flat year-over-year, on revenues of $397.6 million, up 9.9%. For full fiscal 2027, earnings are projected to increase 11.1%, followed by 12.7% growth in fiscal 2028, with revenues rising 10.4% and 8.2% respectively. Nu Holdings trades at roughly 12.63 times forward earnings, with expected revenue growth of 39% and EPS growth of 34% this year, and generates a 13.4% return on invested capital and a 30.9% return on equity. However, Brazil's central bank aggressively raised benchmark interest rates from 10.5% in June 2024 to 14.25% in June this year, then only slightly reduced them to 14.5%, heightening fears of an economic slowdown and consumer financial stress that could pressure Nu's loan book. UiPath carries a Zacks Rank #2 (Buy) and Nu carries a Zacks Rank #3 (Hold).